T-Mobile To Launch Joint Venture With Orange

T-Mobile owner Deutsche Telekom and Orange’s France Telecom have revealed plans to merge their UK businesses to create the country’s biggest mobile phone network, it has been reported.

The two companies have confirmed that they were in “exclusive” discussions to join hands in a 50/50 joint venture.The proposed merger will create the UK’s biggest mobile phone operator with around 37 percent share in the UK market.

The initiative comes after Deutsche Telekom had been mulling over plans to sell its T-Mobile business in the UK due to some disappointing performance.

The new proposed joint venture will surpass Telefonica’s O2 to become the top mobile phone operator in the United Kingdom, with a combined 28.4 million users, excluding those using Virgin Mobile, which uses T-Mobile’s network.

The companies further said the deal would significantly benefit the UK customers, by providing them with expanded network coverage, improved network quality and better customer services.

Analysts estimated that the merged business will have yearly sales of £7.7 billion and rake in profits worth £1.7 billion. They further hoped that the deal would help annual cost savings of more than £445 million.

The companies will continue to hold their respective brand names for the first 18-months after the deal closes.

Gervais Pellissier, France Telecom’s chief financial officer, said: “By combining our operations in the UK, we anticipate the long-awaited consolidation in one of Europe's most competitive markets, thereby creating a well positioned player”.

Our Comments

Yet another massive merger and acquisition deal. T-Mobile UK may disappear completely as it is absorbed by Orange. There are a number of consequences that the merger may generate. It will have a definite impact on MVNO's like Virgin and on smaller players like Three (which has a mast sharing agreement with T-Mobile).